California's New School Finance System
On July 1, 2013, Governor Jerry Brown signed into law the 2013-14 state budget package and instituted a new Local Control Funding Formula (LCFF) that overhauls how California funds its K-12 schools.
The new funding formula replaces the old system of “revenue-limits”—general-purpose funding from the state, which was based on complex historical formulas and made up approximately 70% of a district’s budget—with a per-student base grant that varies by grade span.
The transition to the new formula begins with the 2013-14 school year, but full implementation of the new funding formula is slated to take eight years. Although the majority of school districts will receive more funding under the new formula, districts that were already receiving more funding than what they would get under LCFF are protected by a provision specifying that no district will receive less state aid than it received in 2012-13.
At full implementation, districts will receive 20% more money for high-needs students, based on unduplicated counts of low-income, English learner and foster youth students, and even more for schools with large concentrations of these populations. This additional funding for high-needs students replaces most of the state’s categorical programs—funds the state previously provided to school districts for specific purposes such as summer school programs, school safety or helping certain student populations.
Until the new LCFF is fully funded, districts will receive roughly the same amount of funding they received in 2012-13, plus an additional increasing amount during each year to bridge the gap between current funding levels and the new LCFF target levels.
Unlike categorical programs that come with restrictions on how the money can be spent, schools will have broad discretion over how they use the base grants they receive under the new system. The extra money they receive for their high-needs students must (as written in the law) “increase or improve services for unduplicated pupils in proportion to the increase in funds apportioned.”
In January 2014, the State Board of Education passed emergency regulations telling districts how much money they must spend each year on high-needs students and when that money can be used to fund schoolwide and districtwide programs.
Under the new funding formula, school districts are subject to new rules for transparency and accountability, which include creating—with input from parents and the community—and adopting a Local Control Accountability Plan (LCAP) that lays out how the district will spend the funds and its goals for improving student outcomes according to eight priorities set by the state. Districts that fail to meet their goals and improve student outcomes will receive help through a new system of interventions.
The State Board of Education and the California Department of Education are still working out some of the details and developing new systems for identifying whether schools need help or intervention and for providing that support. (Click here for a timeline of major decisions and milestones for the first four years of LCFF implementation.)
For a more detailed explanation of the new system and additional resources, please see:
California Department of Education’s LCFF web page
EdSource's LCFF guide, with updates on the implementation of the funding system
EdSource's tool to look up and compare how much money a given district will receive under the new formula
WestEd's LCFF implementation website
An analysis of the new funding system by the non-partisan Legislative Analyst’s Office
A summary of K-12 funding in the 2013-14 budget from the Department of Finance
What this means for the reports on Ed-Data
At present, there will be no change on Ed-Data. School districts will continue to report their financial data to the state using the Standardized Account Code Structure (SACS) reporting format. As the California Department of Education develops new reports to align with the requirements of the Local Control Funding Formula—such as tracking unduplicated counts of low-income, English learner, and foster youth students—we will update the relevant reports on the Ed-Data website.
More changes ahead
In addition to the new finance system, California is beginning the process of transitioning to a new set of academic standards, known as the Common Core, and is also changing its student testing and school accountability systems. For more about these changes, please see: Changes to California's K-12 Education System.
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